Technology is changing the way that consumers connect with banks and with each other presenting new opportunities for the previously underbanked, says a new report by the CSC Leading Edge Forum. The report, titled "Connected Consumer and the Future of Financial Services," focuses on four trends in technology that are opening up new possibilities for lower income customers to connect to financial institutions and can give banks new insights about customer behavior.
"Even consumers who would have once been considered high-risk are now finding a range of new financial options," Patrick Molineux, the report's lead author and chief strategy officer of CSC's Financial Services Group, said in a statement. "We're seeing possibilities for lower income consumers that would have been unimaginable just 20 years ago."
The report focused on mobile banking, microfinancing, new media (such as social media and P2P payments) and opportunities for mining data. Mobile financial services, the report says, is fast becoming the primary channel connecting lower income customers with financial services. An estimated two billion people worldwide have a mobile phone but don't have a checking account, the report notes. Microfinance products are similarly providing a new avenue connecting lower income customers to services such as smart cards and mobile access to loans, insurance and savings programs while new media has opened up online lending programs and P2P payments. Social media, the report says, can also boost the voice and influence of consumers over financial institutions.
And all of this consumer interaction, both with banks and with each other, offers an enormous amount of data that banks can mine for a better understanding of consumer behavior. The report says that although it is a big challenge, digging through the vast amounts of social data in conjunction with traditional financial data could "fundamentally alter our understanding of risk and financial services itself."
"In a highly connected world, consumers across the economic landscape are empowered to not only shape their own fiscal futures but ultimately play powerful roles in revolutionizing financial services," CSC's Molineux said. "All organizations need to understand these trends and prepare for the potential disruptions and opportunities coming from connected consumers."